Following last week's Scottish independence referendum, everyone wants a piece of the devo-max action. But how seriously should we take the government's rhetoric?
Let’s have a heated debate, as Mrs Merton used to say. And heated the Scottish independence debate has certainly been. Politicians who moan about the apathy of the electorate have been shaken by the passions expressed in the referendum campaign.
We now know that the No camp prevailed and one thing is clear: the devolution genie is well and truly out of the bottle, with wide-ranging fiscal implications, far to the south of Hadrian’s Wall.
Everyone it seems – from city-regions to county councils – wants a piece of the devo-max action. Party leaders are engaged in a Dutch auction to prove who can give away the most tax-raising powers to what’s left of the UK’s regions.
Fiscal decentralisation across England has received the personal endorsement of the deputy prime minister. He told PF he wants local funding freed up from the ‘dank vaults’ of the Treasury. The Conservative-linked ResPublica think-tank goes further, calling for full fiscal UDI (‘Devo-Manc’) for Manchester and other cities.
So why this new enthusiasm for turbo-charged localism? The blowback from Scotland has exposed the depth of resentment at Westminster’s over-centralised, over-privileged political system. It has also has created a receptive climate for localists to stake their claim.
The One North bloc of northern city leaders, for example, are demanding major public investment – some £15bn worth – for their transport systems and other infrastructure.
The chancellor claims he’s all for it. A ‘Northern Powerhouse’ that challenges London is, he says, exactly what the country needs. There’s even talk of One North forming the centrepiece of his Autumn Statement.
But we could be forgiven for being sceptical. As Mark Hellowell points out, the Treasury’s National Infrastructure Pipeline is skewed to a remarkable degree – 62% of planned expenditure – in favour of London. Hardly a ringing endorsement for decentralisation.
With Communities Secretary Eric Pickles dead set against devolving significant powers from Whitehall – and those bravehearts at the Treasury too timid even to relinquish borrowing rights for local housebuilding – how seriously should we take the government’s rhetoric?
A bigger question is, how desirable is an increasingly fragmented tax and spend landscape anyway? Would it pitch richer against poorer areas – or cities against shires – deepening already profound inequalities?
Current debates over the fate of the Barnett formula – and proposals for an equalisation funding mechanism – indicate the fine line between localism and parochialism. And just how complex devo-everywhere could be.
This opinion piece was first published in the October edition of Public Finance magazine
